Texas Division Orders
What is this form?
A division order is a legal document that details the division of oil and gas production payments among owners. It serves to confirm the ownership interest of a party in the production of these resources. Unlike other agreements, a division order specifically identifies the payor and payee, specifying the amounts payable based on their interest in the production. This document ensures transparency and accuracy in payments related to oil or gas leases.
What’s included in this form
- Payor Name and Address: Identifies the entity making payments.
- Date Issued: The date on which the division order is prepared.
- Property Information: Includes property name, operator, and description, ensuring clarity on the source of production.
- Owner Information: Contains details about the interest owner, including names, addresses, and identification numbers.
- Type of Interest and Decimal Interest: Specifies the type and fraction of the ownership interest the owner holds in production.
- Signature Requirements: Necessary signatures of all owners to validate the agreement.
When to use this form
This form should be used when an owner of oil or gas production needs to formalize their ownership interest and the corresponding payment rights. It is commonly utilized when entering into a lease agreement or when there is a change in ownership or interests in production from oil or gas wells. It ensures that all parties are aware of their rights and responsibilities regarding payment distributions.
Who should use this form
- Property owners or lessors with interests in oil or gas production.
- Operators managing the property or lease agreements.
- Attorneys assisting clients in managing oil and gas interests.
- Buyers of oil or gas leases who require validation of ownership interests.
Instructions for completing this form
- Identify the payor and enter their name and contact information.
- Specify the effective date and the property details, including name and description.
- Detail the owner's information, including name, address, and ownership interest.
- Provide the type of production and the corresponding decimal interest for payment calculation.
- Obtain required signatures from all listed owners to finalize the agreement.
Is notarization required?
This form does not typically require notarization to be legally valid. However, some jurisdictions or document types may still require it. US Legal Forms provides secure online notarization powered by Notarize, available 24/7 for added convenience.
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Make edits, fill in missing information, and update formatting in US Legal Forms—just like you would in MS Word.
Download a copy, print it, send it by email, or mail it via USPS—whatever works best for your next step.
Sign and collect signatures with our SignNow integration. Send to multiple recipients, set reminders, and more. Go Premium to unlock E-Sign.
If this form requires notarization, complete it online through a secure video call—no need to meet a notary in person or wait for an appointment.
We protect your documents and personal data by following strict security and privacy standards.
Common mistakes to avoid
- Failing to include all required signatories on the form.
- Incorrectly specifying ownership interests, leading to disputes in payments.
- Omitting or misreporting the property description or operator name.
- Submitting the form without including an effective date.
Benefits of using this form online
- Convenience: Download and complete the form from anywhere at any time.
- Editability: Easily make changes to ensure accuracy before finalizing.
- Reliability: Forms are drafted by licensed attorneys, ensuring compliance with legal standards.
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FAQ
The percentage each lease tract contributes to the overall PA (or Communitized Area) is referred to as the Tract Participation Factor (TPF). percentage of unit revenue was multiplied by the Royalty (or ORRI) burden, to determine the royalty burden for each tract.
Royalty Interest an ownership in production that bears no cost in production. Royalty interest owners receive their share of production revenue before the working interest owners. Working Interest an ownership in a well that bears 100% of the cost of production.
A division order is a record of your interest in a specific well. It contains your decimal interest, interest type, well number and well name. Division orders are issued to all that own an interest in a specific well after that well has achieved first sales of either oil or gas.
Net revenue is the amount that is shared among the property owners. To determine net revenue interest, multiply the royalty interest by the owner's shared interest. For example, if you have a 5/16 royalty, your net royalty interest would be 25% multiplied by 5/16, which equals 7.8125% calculated to four decimal places.
Your decimal interest is calculated based on your royalty interest in the tract or unit on which the well is drilled.Or, you might own a non-participating royalty equal to 1/16 of the royalty reserved in any lease of the lands in the unit (a fraction of the royalty).
A Division Order (DO's), also known as a Division of Interest (DOI), is the instrument which details the proportional ownership of produced minerals, including oil, liquids, natural gas, etc., in a well or unitized area of production.
Use this formula to calculate your decimal share of royalties from the producing well: (Mineral Interest Share) times (Royalty Rate) = (Royalty Share Decimal). Example 1: (1/3 x 100% mineral interest) times (1/8 Royalty Rate) = 1/3 x 1/8 = 1/24 = 0.04166667 RI.
A Division Order is an instrument which sets forth the proportional ownership in produced hydrocarbons, including crude oil, natural gas, and NGL's. Sometimes the Division Order is referred to as a division of interest. More often than not, a single well or lease will have multiple owners.
Royalty interest in the oil and gas industry refers to ownership of a portion of a resource or the revenue it produces. A company or person that owns a royalty interest does not bear any operational costs needed to produce the resource, yet they still own a portion of the resource or revenue it produces.
